Question 1 Report
Read the information below about a city bus service. The local government pays a subsidy because some routes are used mainly by older residents and students, although the routes make a loss.
(a) State one possible reason why the government may allocate funds to these bus routes. [2]
(a) The government may subsidise the loss-making routes to give people without cars access to work, education or healthcare. This can improve equality and social welfare.
Alternatively, funding bus routes may reduce traffic congestion or pollution. These are external benefits because other people, not only bus passengers, can benefit. Either explained chain gains full credit. [2]
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